Business Documents: What to Keep, Store, and Secure

Tax records

The Internal Revenue Service (IRS) recommends keeping business tax returns and supporting documents for seven years to cover most scenarios involving audits, amendments, or additional tax assessments. This timeframe protects you from potential IRS inquiries and ensures you have the necessary business documentation for future tax preparation.

Keep your business tax returns permanently, because you may need them for loan applications, business valuations, or future tax filings. Paper documents of receipts, invoices, and expense records can be disposed of after seven years, but maintain digital copies when possible for easy reference.

Employment agreements and HR records

Employment record retention requirements vary based on federal regulations and company size. The Equal Employment Opportunity Commission (EEOC) requires businesses with 15 or more employees to maintain employment records for one year from the date of record creation or personnel action. However, specific documents have longer requirements: Family and Medical Leave Act records must be kept for three years, while Occupational Safety and Health Administration injury and illness records require five-year retention.

Many employment attorneys recommend keeping all workplace documents for seven years after an employee leaves the company to protect against potential legal claims. For example, keeping employment contract agreements can help if you run into a dispute.

Operational and legal documents

Maintain official legal documents for your business permanently, including articles of incorporation, articles of organization, bylaws, operating and partnership agreements, and amendments. These documents establish your business' existence and may be required for banking, legally binding contracts, or legal proceedings throughout your company's lifetime.

Examples of business documents you should keep permanently also include annual business reports, meeting minutes, shareholder or member lists, standard operating procedures (SOPs), trademark and copyright registrations, and patent documentation. These compliance and regulatory documents help protect your intellectual property rights.

Financial and property records

Keep financial documents, including profit and loss statements, income statements, balance sheets, and cash flow statements, indefinitely. They provide valuable historical data for financial analysis, loan applications, and updating your business plan. Bank and credit card statements can typically be discarded after one year unless needed for tax support, in which case, retain them for seven years.

Property records, including deeds, titles, and depreciation schedules, should be kept for seven years after you dispose of the property. You’ll need them to calculate capital gains, depreciation recapture, and other tax implications of property transactions.

How to organize and manage business documents

Managing your business documents requires thoughtful planning, consistent processes, and ongoing maintenance. By following these proven practices, you can avoid common pitfalls and create a document management foundation that supports your business plan.

Create consistent processes

Use standardized business document templates to create your documents whenever possible. To organize them, create a hierarchy that reflects how your business operates, such as organizing by department, project, client, or document type. Consistent naming conventions should include relevant information like dates, document types, and version numbers in a standardized format.

Document everything in a written policy that all team members can reference. Lost or misplaced documents often result from inconsistent filing practices or unclear processes. Overcome this challenge by implementing standardized naming conventions, comprehensive metadata tagging, and regular training on proper business document organization.

Choose the right tools

Evaluate business document solutions based on your specific needs, budget, and technical requirements. Consider factors like the number of users, storage requirements, integration needs, and security requirements when comparing options. Cloud-based solutions offer scalability and remote access, while on-premise systems provide greater control over data security.

Don't overlook the importance of user adoption when selecting tools. The most feature-rich system won't benefit your business if team members find it difficult to use. Choose solutions that balance functionality with usability, and consider conducting pilot tests with key users before making final decisions.

Establish regular reviews and disposal protocols

Conduct regular audits of your business documents to ensure compliance with retention schedules and identify documents that can be disposed of safely. Establish clear protocols for secure document destruction that protect confidential information while meeting legal requirements for document disposal.

Digital document audits should include reviewing access permissions, checking for duplicate files, and ensuring that metadata and tags remain accurate and useful. Regular maintenance keeps your business documents organized while reducing storage costs and security risks.

Prepare a backup plan

Implement comprehensive backup strategies that protect your business documents from loss due to hardware failures, cyber attacks, or natural disasters. Your backup plan should include both daily backups and periodic full system backups stored in secure, off-site locations.

Consider how long your business can operate without access to critical documents and plan accordingly. And don’t forget to document your recovery procedures and ensure that key team members understand their roles in emergency situations.

Business documents: FAQs

How long should I keep business documents?

Document retention periods vary by document type and legal requirements. Keep tax records and supporting documents for seven years, employment agreements and workplace documents for one to seven years, depending on the specific type, and corporate formation documents permanently. Financial documents should be kept indefinitely, while bank statements can typically be discarded after one year unless needed for tax purposes. Always consult current regulations for your industry and jurisdiction.

Which documents are required to start a business?

To start a business, you’ll usually need a business formation document like articles of incorporation or articles of organization. You’ll also need a registered business name, an EIN (employer identification number), and any required licenses or permits for your state. If you’re forming an LLC or corporation, an operating agreement or bylaws can help keep things organized.

What documents do I need for taxes or audits?

For taxes or audits, keep copies of your income statements, expense receipts, bank statements, and tax returns. You should also hold on to payroll records, 1099s, and any documents related to deductions or credits. The IRS recommends keeping these for seven years.

Which types of business records must be kept permanently?

Examples of business documents to keep permanently include corporate formation documents, articles of incorporation or organization, bylaws, operating and partnership agreements, and amendments. You should also maintain legal documents for your business indefinitely: annual business reports, meeting minutes, shareholder or member records, trademark and copyright registrations, patent documentation, and financial statements.

Are digital documents legally valid?

Yes, digital documents are generally legally valid when properly created and maintained. The Electronic Signatures in Global and National Commerce Act (E-SIGN) and state electronic signature laws recognize electronic documents and signatures as legally binding. Make sure your digital documents include proper authentication, maintain audit trails, and follow industry best practices for electronic recordkeeping.

Business document templates and resources from LegalZoom

Your business document journey starts with proper formation and continues throughout your company's growth. LegalZoom provides comprehensive support for business document management through our business formation services, compliance and regulatory documents, and business document templates. And our business formation services help ensure that your corporate documents are properly prepared and filed, so you can start off on the right foot.

Whether you're starting a new business or need to update your documents, LegalZoom's tools and expertise help support your success. We provide the resources and guidance you need to maintain organized, compliant business documents that protect and support your growing company.

Jane Haskins, Esq., contributed to this article.